The Performance Management Wars Have Started… who will win?

I’ve been getting quite a few calls lately from investors and analysts that track the Performance Management space. It seems as though the performance management wars are starting to heat up, given all the focus and attention on frequent goal setting, real-time feedback, and being agile with one’s workforce. I imagine COVID is actually accelerating adoption of these services, given the need to effectively manage a remote workforce.

Back in 2016, I trademarked the term “Continuous Performance Management” to capture this concept as the founding CEO of Betterworks. Additionally, it’s clear the work that John Doerr and I have done to advance awareness of OKRs has also catapulted this modern approach to performance management.

Companies that are still setting annual goals, in a non-collaborative manner, and entirely tied to compensation (without stretch goal setting) are being outperformed by those that review and set goals quarterly, share and discuss goal performance up and down and across the organization, and practice more frequent rounds of feedback collection — all for the purposes of maximizing learning, adaptability, and speed of execution.

I usually don’t share these types of predictions, but given a select group of companies are advancing this category, I thought it would be interesting to capture their strengths/gaps, and also document possible exit scenarios for these startups. Note that I am a largish shareholder in Betterworks so this is just my opinion and is probably biased.

1

Betterworks is considered the true innovator in this field. We wrote the book on OKRs, literally. Betterworks also offers CFRs (Conversations, Feedback, and Recognition). Given our deep focus on engineering and product/product design, I would say the product is the strongest in the category. The service integrates with Salesforce, Jira, and many other systems for collecting operational data. Betterworks also has a seasoned CEO that I helped recruit and hire, Doug Dennerline.

2

Lattice is the new kid on the block. They are pretty hip, and work with a lot of startups (Reddit, Asana, etc.). Their product is more small business oriented, and I don’t think they exude a lot of “enterprise DNA”. Their goals product is simple and they focus on basic features that are easy to use. I bet their low friction approach to sales has been quite effective for them. I’m surprised by the way that Doug Dennerline hasn’t enforced the Continuous Performance Management trademark that Betterworks owns against them given that Lattice is really pushing the CPM message on their site.

3

Reflektive came out of the gate strong, but has been wavering lately. They have a great CEO (I worked alongside Greg Brown years ago at WebEx) but it may be a case of “too little too late”. Their focus on real-time feedback was considered innovative but their lack of focus on goals really hurt their ability to deliver a complete solution. I do think they have some enterprise chops, and they do have great backers (Andreesen early, Lightspeed). Also, fun fact, Greg Brown was a few levels below Doug Dennerline back at WebEx when we all worked there – small world!

4

WorkBoard is the surprise in this list. Their product is likely the weakest of the group (and certainly the least cool), and started out around tasks and apparently pivoted, but they have one saving grace – a partnership with Workday. I think Workday made a mistake in partnering here, but who knows – maybe they wanted to fill a very specific need. Workday’s approach to performance management is very traditional and even at Betterworks, we were able to engage Workday customers frequently with our solution as a compelling add-on. WorkBoard of late has seriously gotten onto the OKR bandwagon, copying a lot of Betterworks.

So summary and prediction time… here’s my take:

Strengths Gaps Kris’ Guesstimate Exit (what happens next)
Betterworks Product design and experience, deep goals feature set including integrations,  category innovator Less small business friendly, more for organizations >100 employees Purchased by SAP – SAP has the weakest goal setting of the large players and need some innovation to compete with Workday
Lattice Small business focus, easy to use Enterprise DNA Purchased by Asana or possibly Atlassian
Reflektive Focus on real-time feedback Goal setting Not sure
WorkBoard Partnership with Workday Product is the weakest of the group Purchased by Workday (Workday has weak performance management too)

You’ll notice I left out two major SaaS platform companies – Salesforce and Oracle.

Salesforce already bought Rypple a long time ago and had issues integrating it into their stack. Rypple was more about badging and recognition, but it had some cool features for goal setting and feedback. Salesforce renamed it to work.com, but ended up sunsetting the feature set after it unsuccessfully tried to reposition it as a sales incentive system to recognize salesreps for using the Salesforce system (and performing in their sales roles). Fun fact… Work.com actually just turned into a new service from Marc Benioff to enable remote, COVID-era work. I don’t think Marc will want to take a second pass at the goal setting world, however his focus on goal setting as a leader (V2MOM) is very well respected in the industry.

While Oracle needs more innovation in its business application stack, I don’t consider them to be a leader in this area and certainly in HR, I think they have been relegated to a deep follower behind Workday.  They may end up purchasing some capabilities in this category but my guess is it won’t be big news.

Should be a fun 12-24 months…. can’t wait to see what’s next in the industry!

 

 

Author: Kris Duggan

1% better every day.

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